Flood Insurance Keeps Owners On Safe Ground

COCOA BEACH — In Jan Melvin's 17 years of owning a small motel less than 50 yards from the Atlantic Ocean, the sea water has never come closer than the dune separating her property from the beach.

Despite that record, Melvin continues to pay her $300 annual premium for flood insurance without hesitation. She isn't required to carry flood insurance by her mortgage company, but she thinks it's good business.

''I think it's necessary,'' said Melvin, whose 33-room Islander Beach Resort sits at the end of State Road 520. ''We've been lucky so far, but you can never tell when you're going to need it.''

Introduced by the federal government in 1968 as a way to supplement federal disaster aid, flood insurance has become a common addition to property insurance policies in Florida. In fact, the state -- with miles of populated coastline --has more flood insurance policies in effect than any other state. Florida has about 530,000 policies in effect; Louisiana is next with about 260,000, according to Don Evans, southeastern regional manager of the National Flood Insurance program.

the National Flood Insurance program.

Most people who have flood insurance are required by their mortgage companies to obtain it before they can get their loans. Mortgage bankers who sell loans to the government are required to have flood-prone property covered by flood insurance. Loans backed by the Veterans Administration and the Federal Housing Administration also must be covered by flood insurance if the property is in a flood zone.

However, Evans said many people who bought property before the program was introduced have not obtained coverage. About 66 percent of the 1.26 million structures in Florida in flood-prone areas don't have the coverage, Evans said.

Gina Greenwald, owner of the Surf Studio Motel, south of Cocoa Beach, said she discussed coverage with her insurance agent and decided she didn't need it.

''We're on a higher point on the beach,'' Greenwald said. ''If the water came over the dune, it wouldn't stay here. It would flow down to the lower areas.

''Besides,'' she added, ''we've been here 37 years, and we haven't had a problem yet.''

Flood insurance can be purchased directly from the National Flood Insurance program. But it is more commonly available to both commercial and residential property owners through private insurance companies that have signed up to participate in the federally sponsored program. Obtained either way, the coverage is the same. To file a claim, the policyholder contacts the agent or company who sold the policy, just as in any other insurance claim.

The cost of the coverage depends on where the house or business is and what steps the community has taken to protect against flood damage. The general rule, Evans said, is that people who live on a hill pay less than people who live next to the water. The average annual cost is about $195, but individual costs vary depending on how close a building is to a flood-prone area and on the height of the building's bottom floor; the higher the better.

Not all property owners need flood insurance -- only those who live in flood-prone areas. Those living in flood-prone areas are not required to have it unless their mortgage lenders demand it.

The federal government, using historical and geological data, defines a flood zone as an area that has a 1 percent chance per year of being hit by the ''100-year flood,'' a statistical term used to describe the worst flood that happens every century.

Flood zones occur in more than just coastal areas, too. Inland areas close to rivers or lakes can be designated as flood prone. To find out if a piece of property is in a flood-prone area, property owners can check flood zone maps, which are kept on file at municipal or county building departments.

''The only people who need flood insurance are the ones that live in flood-prone areas,'' he said. ''Consequently, insurance companies couldn't sell enough coverage to spread the risk across the general population.''

In return for the federal subsidy, the government demanded that flood- prone cities and counties adopt building regulations that require structures to be constructed on higher elevations, thus reducing their exposure to flooding.

In some Florida cities, that requirement provoked an angry response from builders because of the higher costs involved. In Florida, 16 cities -- mostly on the west coast or in the Panhandle -- had decided not to participate or had dropped out of the flood insurance program. That meant residents in those areas could not buy flood insurance.

One of those was Cedar Key, which was hit hard in August by Hurricane Elena. Residents there whose homes were flooded weren't covered. A week after the storm, city officials decided they wanted to get back into the program.

There are some drawbacks to flood insurance. Burt Buchanan, who owns the Sea View motel in Melbourne Beach, suffered a $12,000 loss last November when a Thanksgiving Day storm kicked up the surf, causing widespread beach erosion. But his flood insurance did not cover the loss of the seawall, so he canceled the coverage.

''I figured what good is it going to do me if it didn't cover something like that.''

Evans acknowleged that flood insurance is limited to covering buildings and contents. ''A general rule of thumb is that if it has two walls and a roof, it's covered and the contents are covered,'' he said.

Trailers, vans, cars, wharves, piers, gas tanks, land, shrubs, livestock, roads and crops still in the ground also are not covered by the program. Art objects and antiques are limited to $250 worth of coverage above the $500 deductible. Coverage normally lasts for a year, and the deductible is the same for all categories.